VF turning more to own stores

There is much to be said for zigging when everybody else zags, and that appears to be what VF Corp. is doing.

Many U.S. apparel makers are ditching acquisitions and store expansion plans to conserve cash amid the consumer-spending downturn. But VF Corp. is taking a reverse tack to survive the turmoil.

The largest apparel maker in the world by revenue, VF is continuing to add new retail stores and plans to snap up new brands, said Chief Executive Eric Wiseman.

The Greensboro, N.C., company plans to open at least 70 new boutiques world-wide this year, Mr. Wiseman said in an interview. It is committed to a five-year plan that began in 2007 to reduce its reliance on flagging department stores.

Last year, it opened 89 new stores and drew 16% of revenue from its own outlets. It aims to boost direct sales to 22% of revenue by 2012, Mr. Wiseman said. The stores also showcase its brands, which include Nautica, The North Face, Lee Jeans and Vans.

In a recession, it's possible to grab market share as competitors retrench. Companies that do so often come out the recession stronger than ever.

Its expansion plans are a contrast to those of rivals such as J. Crew Group Inc., which has said it is revisiting all store openings. Jones Apparel Group Inc., which owns brands such as Anne Klein, Nine West and Jones New York, said it was "substantially" paring back its store expansion plans. And Liz Claiborne Inc. is postponing store openings until the economy improves.

Of course, expanding in a tight credit market requires having manageable debts, and the article notes that "VF has no long-term debt coming due until the fall of 2010."

The company also appears to be looking toward the recovery in terms of its brand acquisitions, which include luxury products:

Although the luxury sector has been one of the hardest hit in all of retail, Mr. Wiseman said that he is looking to buy more contemporary apparel brands. Earlier this month, VF spent $208 million to acquire the shares it didn't already own and debt of Mo Industries Holdings Inc., which owns Ella Moss and Splendid, makers of $100 t-shirts sold at Barneys New York.

"We know the challenges of the upscale department stores," said Mr. Wiseman. Nevertheless, he defends his strategy, arguing that, for now, VF can capture consumers at lower- and mid-tier retailers, but "when they shift back up to luxury we can catch them there as well."

These may or may not be good moves. Time will tell. But what I like is that VF seems to be a company that is looking beyond the recession and adopting a strategy to maximize the recovery.